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Readers Respond: Should the Fed Be Audited?

Responses: 78

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In February 2013, Senator Rand Paul (R-Ky.) introduced an "Audit the Fed" bill to give Congress oversight of the central bank's credit facilities, including its purchases of Treasury bonds and mortgage-backed securities otherwise known as quantitative easing. Paul agrees with his father, former Texas Representative Ron Paul, that the Fed is a dangerous quasi-governmental authority that is not accountable to the American people because its governors are not elected. Ron Paul said that the Fed is responsible for the financial crisis and has written a book entitled End the Fed.

In 2010, the Dodd-Frank Wall Street Reform Act mandated that the Fed undergo a one-time audit of loans it made to companies like AIG during the 2008 Financial Crisis. The Act also allowed the additional audits of any future emergency loans the Fed might make. Federal Reserve Chairman Ben Bernanke complied, but wasn't happy about the audit. Bernanke said audits made it seem like the Fed was no longer independent. Worse than that, he added, it hampered the Fed's ability to quickly and creatively spur an economy that is still teetered on recession.

Many of the Fed's other activities are audited on a regular basis.

  • The Government Accountability Office (GAO) reviews various Fed bank activities. For details, see GAO Audits.
  • the Office of Inspector General (OIG) oversees an annual audit of the Fed's financial statements. The Fed's balance sheet is published online weekly. For details, see Fed's Balance Sheet.
  • All Reserve banks are audited by the GAO and the OIG.
  • Last but not least, the Fed's financial statements, including the combined financial statements for all Reserve Banks, are published in the Annual Report. (Source: Federal Reserve, Does the Fed Get Audited?)

Monitoring the FRB

Of course the FRB and its policies must be monitored. The Senate has a Finance Comm which can and should oversee what the FRB does, and whether the proposed policies are accomplishing what the FRB does, and what are the costs and consequences of these policies. For example QE I and QE II was based on a series of linked hypotheses which should be tested and critically evaluated. These ongoing critical evaluations should be made public, and performed by highly knowledgeable experts in the field of public finance. The policies of the FRB are likely to have adverse consequences, and thus a cost/benefit analysis of their effects on individuals in various categories (e.g., retirees), on organizations and on government should be mandatory. So, yes, the FRB and its policies should routinely be monitored and evaluated.
—Guest V M Paulsen

yes to audit

the fed shd be audited just as any other entity is. It;s possible for collusion and other means of forgery, etc... I know
—Guest former fed mgmt

FED RESERVE BANK IS NOT A GOV AGENCY

fed reserve bank is not a gov. agency...why is about.com listing it as such?
—Guest worried

at least amend the Constitution

Section. 10. No State shall...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts... Apparently, the States could use any currency as long as it was "gold or silver coin." They couldn't create their own money but Spanish doubloons, pieces of eight, whatever they were, would work. The same section prohibits "ex post facto laws" so it can't be considered obscure or null....OK, maybe it is null by common usage at this point but couldn't we discuss.
—yitreaux

Audit the Federal Reserve

The Federal Reserve should be audited. How could any thinking person, ever think otherwise . . . ?
—Guest Harv Millen

Treason

The Fed, its board members, and lawmakers who approve any type of monetary system have committed crimes and are still committing crimes against humanity. Stop the sea of endless waste , murder, corruption, and the completely SICK SICK SICK society on which monetary systems prey upon
—Guest rjb

us of a american citizen

Jefferson was right when he said that central bank federal reserve issuing money to others loacl banks just by printing it and then charging the citizens interest on it before they receive it is worst then a standing against its citizens yes get rid of the federal reserve it is a scam
—Guest think outside the box

The Fed is not "Federal" at all.

President Jackson had it right with the Second National Bank and his views would still hold true today. Andrew Jackson vs. Nicholas Biddle; President of character vs man of "much less" character. Where are the real leaders of character today that want the limelight - Ron Paul being one that is still living.
—Guest L8 to the talk

It wasn't all the feds fault

We went back to the 1920's /1980's/19th century economic policies the past 8 years, changed not by monetary policy alone, but by fiscal policy as well. Two wars is crazy stimulus so the dollar was already inflated making it harder for the fed to devalue the already devalued U.S. Currency. So the fed basically went "balls to the wall" and gave the banks and in essence, all of us, an endless line of credit. However with the weak stimulus we still fell into what I believe is looking a lot like a liquidity trap or close to it, so now they're pushing the credit line for small banks and in essence, small businesses. The fed did their job .... And this is the very reason why the government doesn't run the money supply. Consumer confidence would be terrible, economic stability would be anemic and politicians would spend more time talking about something they don't know a thing about than doing something. Monetary policy is just too fragile for that kind of chatter. Though fiscal policy should be debated in the political arena. Oh btw since Keynesian economics was adopted every recession was stopped from becoming a depression. So don't pass the crap that Keynes was wrong because looking at the facts ( WWII Vietnam eras) he was right.
—Guest

Punish the Fed for High Treason

For 300 years of theft, slavery and murder. Return the issuance of currency to the hands of the people. Stop the dividing and conquering of nations. Stop cyclical waste and consumption. Stop hoarding the earth's resources from its people.
—Guest Jdoe

YES and immediately

To suggest that they remain beyond audit is lunacy.The notion that they should be allowed to maintain their clandestine operation by virtue of the claim that transparency would hamper their attempt to abate the crisis,is nothing short of insulting.They were instrumental in creating this and almost every other financial problem, that has occurred in this country since their inception. If transparency did cause banks to fail, then that would be nature taking it's course.It would be the result of actions taken by better informed investors.Ask yourself this...... If you were about to make a bunch of investments in banks,would you,given the choice, rather know what is happening at the Fed right down to the last detail or would you prefer a blind craps shoot? An audit could well bring down the entire house of cards with mayhem ensuing.But collapse is an inevitability for this system.Card houses become less sustainable the bigger they get.Either way the outcome will ultimately be calamity
—Guest b. yada

ABSOLUTELY

It is in essence our money in the Fed. We have to pay the Fed for the deficits we have run up and continue to do at an alarming rate. This is simply a check and balance that should have been done decades ago. Why wouldn't they be subject to audit, everyone else in this country can't avoid it so why should the Fed? Taxpayers have a right to know how the US funds are handled through the Fed. In fact I will go further to say, any misappropriations or inability to substantiate spending should result in fines and back payments just like Joe Q. Public gets hit with when the IRS comes knocking and they find things that aren't 100% right. Since the Feds inception, I have no doubt that trillions of dollars have been mishandled, lost, or spent for unauthorized purposes.
—JACIII

RE: Auditing Fedzilla

AUDIT AND DISMANTLE FEDZILLA!!! No accountability has ever been required of Fedzilla since it was started. They routinely reward themselves and their cronies with cushy deals. They also manipulate the national and international supply of money, and the interest rates and banking fees. They also help out their buddies at banks in other countries at the expense of American taxpayers. They have taken over control of, and undoubtedly made off with the national gold and silver stock pile. Their meddling with our, and the rest of the world's money supply has repeatedly lead to disaster, including the latest one. The only way out of our mess now is to tighten our belts. They must be removed from having any responsibility and control over our money supply. I have no faith in the government doing the right things to fix the system, so I expect much higher taxes and inflation coming soon. We must return to Constitutional Law. Fedzilla is a violation of the Constitution! RESTORE THE REPUBLIC!
—Guest American Patriot

Fed audit

YES, the fed should be audited. How else will we know what they did with our money.
—Guest Jeffery Hazen

Joy and Dwayne

Yes, the Federal Reserve needs to be Audited. It is time to do something about all the fraud and scams that has hurt the people our our nation. Greed was the biggest factor. Time to get it done is now. What are we waiting for anther bail out to happen?
—Guest DwaynesJoy
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